National Blog

Well, duh: Inflation May Hit the Poor Hardest

Ron Paul and Campaign for Liberty have always talked about how the Federal Reserve's inflationist policies always hurt the poor the most. Over at FiveThirtyEight they have a good analysis as to why this is the case:

Over the past two years, prices have risen more quickly for many of the things that low-income households spend a lot of their money on, such as rent and utilities. As a result, these households — families earning less than $20,000 — are experiencing a higher rate of inflation than the public at large even as their wages have stagnated, according to a FiveThirtyEight analysis of government data.

We tend to talk about inflation as a single number affecting the whole economy. But everyone experiences a slightly different rate of inflation for the simple reason that we all spend money on different things. The price of cigarettes matters primarily to smokers; the price of diapers affects mostly parents of young children; and the price of gas is a much bigger deal to someone with an 80-mile daily commute than to someone who only takes the car out for weekend excursions.